Paycheck Protection Program:
This federal program is for any small business with less than 500 employees (including sole proprietorships, independent contractors, self-employed persons) and private non-profit organizations. Applications for these loans will be processed through participating banks.
Loans are based on 2 1/2 times average payroll costs (including wages, benefits, and payroll taxes as well as commissions, income or net earnings from self-employment) up to $10 million. Wages are capped at a maximum of $100,000 per person. Documentation for loans will include payroll records as well as 1099-MISC forms filed by the business, income statements for a sole proprietorship and bank records. Loans have a 1% interest rate and term of two years, with payments deferred for the first six months. However, loans will be forgiven if the funds are used for qualifying expenses, including payroll costs, mortgage interest, rent and utilities, as long as the business maintains or quickly rehires employees at regular salary levels. Forgiveness is reduced if there is a decline in full time employees, or if salaries and wages decline. A maximum of 25% of nonpayroll costs are eligible for forgiveness.
Applications for the SBA Paycheck Protection Program loans for small businesses and sole proprietorships are open as of April 3rd. Independent contractors and self-employed individuals can apply beginning April 10 th. This program is available through June 30th or until funds run out. Due to expected high demand, we recommend you submit an application soon.
For more information on this program, please visit SBA Paycheck Protection Program To start an application, contact your local bank. You can download a sample loan application form here SBA sample PPP application form
Economic Injury Disaster Loans and Loan Advance:
Small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000 and working capital loans of up to $2 million, to help overcome the temporary loss of revenue from COVID 19. Funds will be available within 3 days of a successful application, and the $10,000 advance will not need to be repaid (even if your loan application is denied). Loans will bear interest at 3.75% for small businesses and 2.75% for nonprofits.
Additional loan program for businesses with more than 500 employees:
The US Treasury Department has been authorized to create a program to provide loans, loan guarantees and other investments to mid-sized businesses with 500 to 10,000 employees. Loan terms will include a 2% interest rate and a delay in payment of principal and interest for at least 6 months. Requirements to participate in this program include the retention or restoration of 90% of the business workforce at full wages and benefits through September 30, 2020; intention to restore 90% of the workforce in place on Feb 1, 2020; adhere to limits on executive compensation; and others. There is no provision for forgiveness of principal under this program.
The process for this loan program is not yet in place, but is expected to be through local banks – we will advise you when we hear more.
California Infrastructure and Economic Development Bank
The governor of California has authorized $50 million in resources for microloans to small businesses through the Disaster Relief Loan Guarantee Program. Businesses with up to 750 employees and eligible nonprofits can apply for loans of up to $50,000 through qualified lenders. For more information, visit CA Disaster Relief Loan Guarantee Program COVID 19
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